The FCA Consumer Duty is a set of rules that require regulated firms, including car dealers who arrange or broker finance, to act to deliver good outcomes for customers. It came into force on 31 July 2023 for new and existing products, and 31 July 2024 for closed products. If your dealership introduces customers to lenders, earns commission on finance, or sells any add-on regulated by the FCA (GAP insurance, warranties sold as insurance), Consumer Duty applies to you. In practice, that means checking your finance products represent fair value, your customer communications are clear, you support customers properly (including vulnerable ones), and you can show evidence of all of it.
This guide breaks down what Consumer Duty actually requires from a car dealer's point of view, what "fair value" and "foreseeable harm" mean in a forecourt context, and the practical steps to take. It is not legal or compliance advice - always check current guidance on fca.org.uk and gov.uk, and speak to your compliance provider or principal firm before making decisions that affect your FCA permissions.
What is the FCA Consumer Duty?
Consumer Duty is built around a new Consumer Principle - Principle 12 in the FCA's Principles for Businesses - which states that a firm must act to deliver good outcomes for retail customers. It replaced the old approach of "Treating Customers Fairly" (TCF) with something more demanding: firms now have to prove, with evidence, that customers are actually getting good outcomes, not just that policies exist saying they should.
The Duty applies to any firm involved in the manufacture or distribution of products and services to retail customers where the firm has a material influence over customer outcomes. For car dealers, that firmly includes:
- Dealers who are directly authorised by the FCA as credit brokers
- Dealers who act as appointed representatives (ARs) under a lender's or network's FCA authorisation
- Any dealer introducing customers to finance, even where the finance decision itself is made by a lender
If you sell finance in any form - PCP, HP, or you take a commission for introducing a customer to a lender - Consumer Duty is relevant to your business. This is a separate, standalone regulatory framework, so it applies whether you are directly authorised or operating as an AR under a principal firm's permissions.
Does Consumer Duty apply to independent car dealers?
Yes, if you hold FCA credit broking permissions or operate under a principal firm's authorisation to introduce finance. Consumer Duty does not create a new authorisation requirement on its own - it sits on top of whatever FCA permissions you already hold and changes how you're expected to operate under them.
Dealers who do not sell finance or any other FCA-regulated product are generally outside the direct scope of Consumer Duty, but many independents do offer finance, and most lenders and finance platforms will expect their introducer dealers to be able to demonstrate Consumer Duty compliance as a condition of the relationship. If you're not sure whether your dealership is in scope, this is a conversation for your principal firm or compliance provider, not something to guess at.
The four outcomes of Consumer Duty
The FCA groups Consumer Duty requirements into four outcomes. Each one has a practical read-across for a dealership selling finance.
1. Products and services
Finance products you offer need to be designed and distributed to meet the needs of the customers you actually sell to, and to work as intended for that group. In practice: don't route every customer into the same finance product regardless of their circumstances, and make sure the products you offer through your website and showroom are appropriate for your typical customer base.
2. Price and value (fair value)
This is the outcome that gets the most attention in motor finance, because it covers commission. The FCA expects firms to assess whether the price a customer pays (including the cost embedded in dealer commission) represents fair value relative to the benefits they receive. You don't need to set your own commission rates to zero, but you do need to be able to show that your commission arrangements have been assessed for fair value, not simply accepted because "that's what the lender offers."
This sits alongside separate, ongoing FCA and court scrutiny of historical commission arrangements in motor finance, particularly discretionary commission structures that were banned from January 2021. If this touches your dealership - past or present commission arrangements - that's a live and fast-moving area, so get direct advice from your principal firm, lender, or compliance provider rather than relying on a blog post for specifics.
3. Consumer understanding
Customer-facing communications, including finance adverts, monthly payment examples, and the explanations your sales team give at the point of sale, need to be clear, fair, and not misleading, and they need to actually be understood by the customers receiving them. A representative APR example buried in small print technically discloses the information, but if ordinary customers can't reasonably follow it, that's a Consumer Understanding problem.
4. Consumer support
Customers need to be able to get help when they need it, including after the sale - queries about their finance agreement, complaints, requests to switch or settle early, or support if their circumstances change. Support should be as easy to access as the sales process was to get into. A common finding in FCA reviews across sectors is that it's far easier for a customer to buy than it is to complain or get help afterwards - Consumer Duty specifically targets that imbalance.
The cross-cutting rules: avoiding foreseeable harm
Underneath the four outcomes sit three cross-cutting rules that apply across everything a firm does:
- Act in good faith towards customers
- Avoid causing foreseeable harm to customers
- Enable and support customers to pursue their financial objectives
"Avoiding foreseeable harm" is the one worth sitting with. It means thinking ahead about what could go wrong for a customer, not just following your process and hoping for the best. Examples in a dealership context: pushing a customer toward a longer finance term or a higher-cost add-on because it suits your commission rather than their situation, not flagging obvious affordability concerns, or letting a customer sign a finance agreement without a proper explanation because it's the end of the month and you need the deal done. None of that requires bad intent to become a Consumer Duty issue - foreseeable harm is judged on the outcome, not the motive.
Practical steps for car dealers
You don't need to become a compliance department overnight, but there are concrete things most dealerships can do:
1. Review your finance commission structure. Ask your lender or finance platform whether your commission arrangements have had a fair value assessment, and keep a record of that conversation.
2. Audit your customer-facing finance materials. Check that website finance calculators, adverts, and printed material use clear representative examples and don't bury key terms.
3. Train your sales team. Everyone who discusses finance with a customer should understand affordability basics, how to spot a vulnerable customer, and what "foreseeable harm" means in practice - not just how to close the deal.
4. Put a complaints process in place that customers can actually find, and make sure it's followed consistently, not just documented.
5. Keep records - this is where most of the real Consumer Duty exposure sits. The FCA expects firms to hold evidence of the outcomes customers are getting, not just policies describing what should happen. That means customer communications, finance documentation, complaints logs, staff training records, and management information you can point to if asked. This is one of the strongest arguments for running your sales, finance, and customer records through a proper dealer management system rather than scattered spreadsheets and paper files - a DMS that logs every customer interaction, stores signed finance documents against the deal, and keeps an audit trail gives you something to actually show a lender, network, or the FCA if your Consumer Duty evidence is ever questioned.
Vulnerable customers
Consumer Duty puts specific weight on how firms treat customers in vulnerable circumstances - which can include financial difficulty, health conditions, low financial capability, or major life events like bereavement or job loss. The FCA's expectation is that firms can identify vulnerability where it's reasonably apparent and adjust how they sell and support accordingly, not that every customer needs to disclose a formal status. For a dealership, that might mean training staff to recognise signs of financial stress during a finance conversation, and having a documented process for what happens next rather than leaving it to individual judgement on the day.
Consumer Duty and your day-to-day paperwork
A lot of Consumer Duty, in practice, comes down to documentation you were probably already generating but not necessarily keeping in one place: finance applications, signed agreements, communications with the customer before and after the sale, and complaints. If you're also managing Making Tax Digital compliance for your accounts, the same principle applies - a single system of record beats chasing paper trails across departments when a lender, network, or regulator asks a question.
If you're still working out how finance fits into your dealership more broadly - the difference between HP and PCP, FCA authorisation routes, and how finance calculators work on your website - our guide to car finance for dealers covers that ground in detail. For more practical, dealer-focused guides like this one, browse the rest of the Vehiso blog.
FAQs
Does Consumer Duty apply to car dealers who sell finance?
Yes. If your dealership is directly authorised by the FCA as a credit broker, or operates as an appointed representative introducing customers to finance under a lender's or network's authorisation, Consumer Duty applies to that part of your business.
What is the FCA Consumer Duty in simple terms?
It's a regulatory requirement for FCA-authorised firms to act to deliver good outcomes for customers, backed by a new Consumer Principle, three cross-cutting rules, and four specific outcomes covering products, price and value, communications, and customer support. It replaced the older Treating Customers Fairly approach with a higher, evidence-based standard.
What are the four outcomes of Consumer Duty?
Products and services, price and value (fair value), consumer understanding, and consumer support. Each outcome sets out what "good" looks like for that part of the customer relationship.
What records do car dealers need to keep for Consumer Duty?
Evidence that customers are getting good outcomes in practice: fair value assessments for commission arrangements, customer communications, signed finance documentation, complaints records, staff training records, and management information reviewed regularly. A dealer management system that logs this centrally makes it far easier to produce on request.
What happens if a dealer breaches Consumer Duty?
Consequences depend on the nature and scale of the breach and are set by the FCA and, where relevant, your principal firm or lender. This can range from requirements to remediate customers and processes through to formal FCA enforcement action. Specifics are for the FCA and your compliance provider to advise on, not something to estimate generically.
Is Consumer Duty the same as Treating Customers Fairly (TCF)?
No. TCF was an earlier, broader expectation. Consumer Duty replaced it with a more specific, evidence-based framework - a new Consumer Principle, cross-cutting rules, and four defined outcomes - that requires firms to demonstrate good customer outcomes rather than simply having fair-treatment policies in place.
This article is for general information and does not constitute legal or compliance advice. FCA rules and guidance can change, and your specific obligations depend on your authorisation status and business model. Always check current guidance at fca.org.uk and gov.uk, and consult your compliance provider or principal firm before acting.
